Transportation and Automotive Sector Ideas

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>>> Warren Buffett was right to buy NetJets


by Brian Sozzi

Yahoo Finance

March 30, 2019


https://finance.yahoo.com/news/warren-buffett-was-right-to-buy-net-jets-132829722.html


Let’s be real here: Warren Buffett’s purchase of NetJets has likely paid off handsomely.

The “Oracle of Omaha” plunked down a cool $725 million to buy then struggling executive jet player NetJets in 1998. Since then, NetJets has morphed into the unquestioned leader in the fractional jet marketplace. In part that’s due to Buffett’s mind-blowing $18 billion investment in the company in 2012, mostly allowing it to buy a host of new planes. Other companies in the space have’t been able to keep pace with that type of capital investment.

And indeed NetJets has delivered on the front of putting Buffett’s cash to work.

NetJets now has 750 aircraft in operation (it had 130 at the time of Buffett’s acquisition) that whisk executives to various meetings throughout the day, of course offering a car right on the tarmac to shuttle them around town. A NetJets spokeswoman told Yahoo Finance the company has firm orders in place for about 80 plane deliveries in 2019 and 2020.

But since Buffett’s big buy, NetJets has also morphed into the mode of transport for celebrities and influencers that can’t help but to post photos of their experience on Instagram. The combination of healthy corporate and influencer markets has NetJets on track to achieve solid growth in 2019, despite a fractional share setting someone back north of $150,000.

The NetJets spokeswoman said the business will see 5%-6% growth in 2019. It’s reportedly profitable. Not too shabby compared to commercial airlines such as SouthWest Airlines warning about current demand trends.

Buffett is a frequent NetJets user, the company’s president of sales and marketing Patrick Gallagher told Yahoo Finance. One reason why you ask (besides the fact he owns it)? NetJets flies without a number on the tail, meaning dealmakers such as Buffett can travel undetected.

Because hey, the eyes are always on where the players such as Buffett are traveling to.

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